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American Financial Eyes Growth Despite Cat Loss Exposure
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On Sep 20, 2016, we issued an updated research report on American Financial Group Inc. (AFG - Free Report) .
American Financial’s inorganic growth story remains impressive with strategic acquisitions. The company’s decision to acquire the remaining shares of National Interstate displays its prudence to invest in a safe business environment. The property and casualty (P&C) insurer will acquire only those shares of National Interstate that are not owned by Great American Insurance Company, the wholly owned subsidiary of the acquirer, for $320 million.
Further, the company has been experiencing consistent price increases in the P&C business, and intends to maintain satisfactory rates in P&C renewal pricing in the future. Along with price increase, loss projects cost trends to remain stable and appear relatively benign across all the P&C lines. These are strong positive trends that should favor the company in the long run.
Riding on its operational strength, the company engages in shareholder friendly moves that make it an attractive pick for yield seeking investors. In its latest endeavor, the board of directors hiked its dividend by 12%. The company also has about 4.6 million shares remaining under its authorization.
Based on strong results through the first half of 2016, the company expects earnings of $5.35–$5.75 per share this year.
Notably, the Zacks Consensus Estimate has witnessed upward estimate revisions over the last 60 days. The same inched up 0.7% and 1.5% for 2016 and 2017, respectively, over the same time frame.
However, the P&C insurer remains exposed to catastrophe losses, which have resulted in earnings volatility. Despite catastrophe mitigation techniques deployed by the company this continues to be a headwind.
Zacks Rank and Stocks to Consider
Currently American Financial carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are National Interstate Corporation (NATL - Free Report) , NMI Holdings, Inc. (NMIH - Free Report) and Cincinnati Financial Corp. (CINF - Free Report) . While both National Interstate and NMI Holdings sport a Zacks Rank #1 (Strong Buy), Cincinnati Financial holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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American Financial Eyes Growth Despite Cat Loss Exposure
On Sep 20, 2016, we issued an updated research report on American Financial Group Inc. (AFG - Free Report) .
American Financial’s inorganic growth story remains impressive with strategic acquisitions. The company’s decision to acquire the remaining shares of National Interstate displays its prudence to invest in a safe business environment. The property and casualty (P&C) insurer will acquire only those shares of National Interstate that are not owned by Great American Insurance Company, the wholly owned subsidiary of the acquirer, for $320 million.
Further, the company has been experiencing consistent price increases in the P&C business, and intends to maintain satisfactory rates in P&C renewal pricing in the future. Along with price increase, loss projects cost trends to remain stable and appear relatively benign across all the P&C lines. These are strong positive trends that should favor the company in the long run.
Riding on its operational strength, the company engages in shareholder friendly moves that make it an attractive pick for yield seeking investors. In its latest endeavor, the board of directors hiked its dividend by 12%. The company also has about 4.6 million shares remaining under its authorization.
Based on strong results through the first half of 2016, the company expects earnings of $5.35–$5.75 per share this year.
Notably, the Zacks Consensus Estimate has witnessed upward estimate revisions over the last 60 days. The same inched up 0.7% and 1.5% for 2016 and 2017, respectively, over the same time frame.
However, the P&C insurer remains exposed to catastrophe losses, which have resulted in earnings volatility. Despite catastrophe mitigation techniques deployed by the company this continues to be a headwind.
Zacks Rank and Stocks to Consider
Currently American Financial carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are National Interstate Corporation (NATL - Free Report) , NMI Holdings, Inc. (NMIH - Free Report) and Cincinnati Financial Corp. (CINF - Free Report) . While both National Interstate and NMI Holdings sport a Zacks Rank #1 (Strong Buy), Cincinnati Financial holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>